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This blog was sponsored by Escheatment
Could your nonprofit have thousands or even millions of dollars in assets that it doesn’t even know about? It’s entirely possible, given the tangled maze of laws and processes relating to these unclaimed assets. Here’s what you need to know.
What is “escheatment”?
When certain assets are left unclaimed, those assets are transferred to states and other governmental entities in a process known as escheatment. The assets are then custodially held until the rightful owner can reclaim them. Currently, more than $50 billion dollars of custodial escheatment is in governmental possession.
Assets can wind up in this “limbo” for several reasons. States require entities to escheat unclaimed assets on an ever-shortening schedule. Legislatures are simultaneously expanding the definition of escheatment to include more asset categories. Increasing escheatment audits and fines encourage remittance to the state rather than attempting to locate the true owners.
As an individual, you may have heard about how you can search online databases for unclaimed property in your name. You can even try a few variations of the spelling of your name to see if there’s any other property that might have slipped through the cracks. And then, as long as you can verify your identifying information, there’s a good chance you can retrieve the assets that should rightfully be in your hands.
What does this mean for nonprofits?
For businesses and nonprofits, it gets more complicated. Most large corporations have hundreds or even thousands of claims across the country—and beyond. There could be many variations on names and addresses for each organization that has caused those assets to slip through the cracks.
For example, research large nonprofits such as the American Cancer Society, American Red Cross, NAACP, UNICEF, and Boys & Girls Clubs of America in several state databases. You might see thousands of checks that are sitting in state treasuries instead of going to the charities.
To me, that’s the ultimate frustration of the donors’ intent. Those donors assume that they have made a valuable gift to their favorite charity. In reality, the money is sitting dormant in a state treasury somewhere.
Furthermore, even when those assets are discovered, claiming them can be complicated and circuitous. Escheatment laws are state- and country-specific, and the reclamation processes required by each state or country is unique. Navigating these claims can be burdensome to complete without professional assistance, especially for those in the nonprofit sector.
Why search for funds now?
If there’s ever been a right time to search for unclaimed assets, that time is now. Of course, during one of the most uncertain times in history, every dollar a nonprofit organization can raise makes a difference. It makes good sense for a nonprofit to attempt to claim what is owed and to do it as quickly as possible to help folks in need.
Additionally, there’s now a greater likelihood that donations or other assets might wind up in custodianship. As mentioned, states are beginning to shorten the time frame for how long companies have to remit these escheated properties. They are also expanding escheatment laws to include items such as gift cards and other nebulous assets.
It’s a great windfall for the state or government treasury if you think about it. They don’t necessarily pay any interest on it, and it just sits in their coffers. Often times, government entities go ahead and spend these monies in the general fund because they know that people are not going to reclaim them back quickly.
All in all, it adds up to a lot of money, and none of it is in its rightful hands. For nonprofit organizations, that could make a huge difference—especially in a difficult and unpredictable giving environment.
How can you get help?
After seeing hundreds of examples of escheatment in my law practice, my team and I formed a company: Escheatment. We are offering our asset recovery services pro bono for nonprofits.
We adapted the software tools that we use in litigation to the databases that list escheatment. Using these proprietary tools, we can search and reclaim assets across all state governments and other custodians, eliminating the burdensome individual custodial processes. Through this process, we can identify and help reclaim the assets that rightfully belong to any organization.
If you’re curious about what funds might be available for your nonprofit to claim, visit us at Escheatment.com. The home page has a clickable map of all 50 states with links to their state treasuries’ unclaimed funds accounts. If you’re ready to let us help you search for those assets, reach out to us.